When South Africans begin exploring offshore investments or international money transfers, they often wonder how much money they can legally move offshore. South Africa’s exchange control framework sets clear annual limits for individuals transferring funds abroad each year.
However, the real challenge is not usually the allowance limits themselves; it’s structuring the transfer correctly and ensuring the right approvals are in place. Without proper planning, even relatively simple international money transfers can become slow, complicated, and frustrating.
Understanding the Single Discretionary Allowance (SDA)
The most commonly used allowance for offshore transactions is the Single Discretionary Allowance (SDA), which says that SA residents can transfer up to R2 million abroad per calendar year without tax clearance from the South African Revenue Service (SARS). This allowance is often used for a variety of international transactions, including:
- Offshore investments
- Travel expenses
- Supporting family members abroad
- Smaller international purchases or transfers
Because SDA transfers do not require SARS tax clearance, they are generally the fastest and simplest way to move funds offshore. However, once transfers exceed this annual threshold, additional approvals are required.
A guide to AIT applications
Once an individual’s annual SDA has been fully utilised, any additional offshore transfers - of up to R10 million per calendar year - require an Approval of International Transfer (AIT) from SARS. This allowance is only accessible once specific compliance steps are met.
To proceed, individuals must obtain tax clearance from SARS by completing an AIT application process. The AIT confirms that a taxpayer’s financial affairs are compliant and that the funds being transferred have been properly declared.
Meeting the AIT requirements for international money transfers involves submitting detailed supporting documentation, which may include:
- Tax compliance verification
- Statements of assets and liabilities
- Source of funds documentation
- Financial statements or supporting records
Given that the process can be technical, many individuals seek AIT application assistance to ensure accuracy and avoid delays. Once the AIT is approved, financial institutions can process your international money transfer within the permitted allowance.
Why many offshore transactions run into problems
Although the rules themselves are relatively clear, many individuals still encounter delays when moving money abroad. In most cases, the issue is not due to the allowance limits themselves, but rather how the transfer is structured. Common challenges include:
- Incorrect or incomplete AIT applications
- Missing supporting documentation
- Unclear source of funds
- Delays in SARS tax clearance processes
When these issues arise, transfers can take significantly longer than expected. This is why planning and preparation are so important when moving larger sums offshore.
Structuring international money transfers correctly
When international money transfers are structured correctly from the beginning, the process becomes far smoother. This typically involves preparing the correct documentation, confirming tax compliance, and ensuring that the transaction aligns with South Africa’s exchange control regulations.
Many individuals choose to work with specialist foreign exchange providers who can assist with this process. These experts guide clients through AIT applications, documentation requirements, and regulatory approvals before the transfer is initiated.
